Inside Asian Gaming

inside asian gaming September 2015 36 $1.59 billion. Melbourne’s adjusted EBITDA surpassed 2014’s by 17.8%, Perth’s by 5.3%. Mr Craigie and his executive team have no intention of running in place either. More than $100 million in reinvestment is slated for Crown Melbourne next year, another $328 million at Crown Perth. The room product and non-gaming offering at WA’s only full-scale casino have been revamped top to bottom. A third luxury hotel is under construction there and is scheduled to open next December with 500 six-star rooms, more high-end restaurants and MICE facilities and more VIP gaming space. A fourth hotel is planned for Crown Melbourne, a five-star affair with a complement of luxury apartments. And with ground set to be broken this year on the US$2.8 billion Alon on the Las Vegas Strip, and planning moving ahead for the $2 billion Crown Sydney, the company’s first foray into Australia’s largest city, and MCE’s Studio City getting ready to open the doors this fall, it is certain that Mr Packer will be leaning more heavily than ever on his No. 2’s experience and advice. Mr Craigie has played an integral role in the Packer family’s casino fortunes going on a quarter-century. Kerry Packer recruited him from the state of Victoria’s TAB in 1993 to head his machine gaming operations. By 2002, he’d risen to chief executive of Crown Melbourne Limited, as the company was known at the time, and of Burswood Limited, Crown Perth’s predecessor. He also served on the board of Consolidated Media Holdings, the television and newspaper company on which the Packer empire was built. Since the present- day Crown was formed in 2007, he has been its only CEO. South Korea’s 16 foreigner-only casinos are fast becoming an anachronism in a continent increasingly replete with the latest and greatest destination-scale gaming resorts. The largest and best-known currently operating foreigners-only casino was opened in 1968 by Paradise Group at the Sheraton Walker Hill Hotel in the capital, Seoul, one year after the sector was legalized. It’s got 79 tables, twice the average among its peers. In 2014, foreigners-only casinos generated about 1.4 trillion won (US$1.2 billion) in gaming revenue, essentially flat from the year before. To emphasize the sector’s modest size and its potential for growth, observers contrast that figure with Macau’s casino revenue, which last year was 36 times greater, at $43.9 billion. It’s a sensationalistic comparison, but there is perhaps some merit in making it because the two markets aren’t as different as they appear at first glance. Macau’s casinos, though technically permitted to serve locals, derive a virtually insignificant proportion of their revenue from them. The bulk of the take at both Macau’s casinos and Korea’s foreigners- only venues is supplied by players from mainland China. The split between VIP and mass market is also fairly similar across the two markets. There’s a big difference in capacity, though, with about 620 gaming tables across Korea’s foreigner-only sector, versus 5,700 tables in Macau, making a pound-for-pound comparison between the two markets more meaningful than a top-line revenue comparison: the average Macau table generated $7.7 million last year, close to four times the yield of the average Korean foreigner-only table, which made $2 million. The two markets have different catchment areas, but that doesn’t seem to explain the gap. Macau, situated on China’s affluent southern coast, benefits from its proximity to the wealthy residents of Guangdong province. South Korea’s foreigner-only casinos, Phil-lip Chun Chairman and CEO Paradise Group meanwhile, enjoy an exclusive position in northeast Asia, providing the closest legal gaming tables to not only wealthy northern Chinese, including residents of Beijing and Shanghai, but also to Japanese. There is arguably sufficient demand in Korea’s neighborhood to support a casino industry with a capacity close to that of Macau’s, even if the ban on domestic play remains in place. The reason an average table yields so much more in Macau than in Korea is the two markets don’t offer comparable products. Over the past decade, lavishly appointed resorts unveiled in Macau, Singapore and, most recently, the Philippines, have drastically altered regional gamblers’ expectations of a casino experience. As JP Morgan analyst DS Kim puts it, Korea currently lacks “‘real casinos’—that are of comparable scale and quality and have similar offerings as those in other markets—to appeal as a destination to gamblers in the region.” The Korean government first resolved to address this shortfall back in 2011 with plans to approve the development of a number of integrated resorts with foreigners-only casinos. The first project to get the go-ahead was a joint venture between Paradise Group, the country’s leading foreigners-only casino operator, and Japanese